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Renters' Tax Credits

The
Renters' Tax Credit Program provides
property tax credits for renters who meet certain
requirements.The
plan was modeled after and designed to be similar
in principle to the Homeowners' Tax Credit Program,
which is known to many as the Circuit Breaker
Program. The concept rests on the reasoning
that renters indirectly pay property taxes as
part of their rent and thus should have some
protection, as do homeowners.

The plan is based
upon the relationship between rent and income. If the portion of rent
attributable to the assumed property taxes exceeds a fixed amount in relation
to income, the renter can, under specified conditions, receive a credit
of as much as $750. The credit is paid as a direct check from the State
of Maryland.

HOW
A RENTED DWELLING IS DEFINED

The
rented dwelling may be an apartment in an individual
house or any type of apartment building, duplex,
co-op, condominium, house trailer, or mobile
home pad. The dwelling must be the principal
residence in Maryland and the renter must live
there at least six months of the year. You are
only eligible to receive a tax credit for rent
paid in the State of Maryland.

The
applicant must have a bona fide leasehold interest
in the property and be legally responsible for
the rent. If the dwelling that is rented is
owned by a tax exempt, charitable organization
or is exempt in any way from property taxation,
a tax credit cannot be granted.

HOW
TO DETERMINE IF YOU MAY BE ELIGIBLE

COMBINED
INCOMES: Credits are calculated according
to total income, meaning all combined gross
household income before deductions. This includes
income from all sources, whether or not taxable
for federal and state income tax purposes. It
also includes Social Security as well as all
other retirement benefits.

AGE
60 OR OVER OR 100% DISABLED

If
you are age 60 or over or 100% disabled, use
the chart below to determine if it is worthwhile
for you to file an application.
Note: A surviving spouse of one who otherwise
would have been eligible also qualifies.
CHART
1
1. Find your approximate
2014 total gross household income in Column A.
2. If
your monthly rent is more than
the figure in Column B across from your
income, you may be eligible and
are encouraged to apply.

Column
A
Total Income

Column
B
Monthly Rent

$1
- 5,000

14

6,000

28

7,000

42

8,000

56

9,000

86

10,000

117

11,000

147

12,000

178

13,000

219

14,000

261

15,000

303

20,000

544

25,000

794

30,000

1,044

The
rent in Chart 1 assumes that you pay all your
own utilities separate from the monthly rent.
If the rent includes gas, electric and heat,
you may need to have as much as 18% higher monthly
rent to qualify for a credit.

Trailer
park residents are advised to submit an application
and allow this office to determine eligibility.

Chart
1 is a guide only, and the exact amount of your
income and rent will be used to determine your
eligibility. If you submit an application, the
State will determine your eligibility.

UNDER
60 YEARS OF AGE

If you are a renter
under the age of 60 who, during 2014, had at least one dependent under
the age of 18 living with you AND you did not receive
federal or state housing subsidies or reside in public housing AND the combined income of all residents of your dwelling is below the following
guidelines, you are encouraged to apply.

CHART
2

Persons
in Household
(Include Applicant)

2014
Gross
Income Limit

2

$16,057

3

18,552

4

23,834

5

28,265

6

31,925

7

36,384

8

40,484

9

48,065

Note:
If you think you qualify based on the income
limits on the above chart, you are encouraged
to apply. The State will determine your eligibility
using the above chart and the formula that compares
rent and income (See Chart 1).

WHEN
AND HOW TO APPLY

Renters
have until September 1 of the
year in which the credit is sought to apply,
but it is advantageous to file as early as possible.

The
standard form on which to apply is provided
by the Tax Credits Office of the State Department
of Assessments and Taxation.

The
property tax relief a renter may receive is
based upon a comparison of the assumed real
property tax in the yearly rent minus a percentage
of the household income as shown here:

0%

of the first $4,000 of income

2.5%

of the next $4,000 of income

5.5%

of the next $4,000 of income

7.5%

of the next $4,000 of income

9.0%

of all in excess of $16,000

Estimating
your own tax credit can be done by taking these
three steps. Remember, the key to the plan is
your rent in relationship to your income.
The plan assumes that 15% of your occupancy
rent goes toward the payment of property taxes.
Occupancy rent does not include charges for
heat, utilities, or any other fees paid with
the rent.

Step
1:

Find your 2014
income and tax limit from the chart in the next column. Example:
If your income is $11,000, your tax limit
is $265.

Step
2:

Take
15% of the total occupancy rent for the
year 2014. Example:
A monthly rental of $300 would amount
to $3,600 a year. Fifteen percent of $3,600
is $540.

The
$275 difference is the amount the renter would
receive as a tax credit.

The amount of the
renters' tax credit will vary according to the relationship between the
rent and income, with the maximum allowable credit being $750. Those found
eligible for a credit as determined by the State Department of Assessments
and Taxation will receive a check directly from the State Treasury. Anyone
who is found ineligible will be notified in writing and given the reason
why.

IMPORTANT: If
15% of your occupancy rent is more than the
tax limit amount shown on the schedule below
for your income, you are urged to file a Renters'
Tax Credit application.

2014 Combined
Income

Tax
Limit

$
0 to 4,000

$
0

5,000

25

6,000

50

7,000

75

8,000

100

9,000

155

10,000

210

11,000

265

12,000

320

13,000

395

14,000

470

15,000

545

16,000

620

17,000

710

18,000

800

19,000

890

20,000

980

For
each additional $1,000 of income, add $90
to $980 to find the tax limit.